Luxury, 2025 will be negative. US and China weigh heavily

Last year ended with sales of luxury personal goods at 364 billion, down 1% on 2023, and the industry's hopes had been pinned on a hypothetical recovery in the second half of 2025. The usual mid-year update of the Altagamma-Bain monitor almost definitively extinguishes hopes that this recovery can really happen. According to estimates released yesterday in Milan, in fact, the most likely scenario is that the luxury personal goods market will close with a moderate contraction between -2% and -5% compared to 2024.

The year, after all, started with a decline of between -1 per cent and -3 per cent. "2025 marks a turning point for global luxury: for the first time in 15 years, the industry is slowing down, squeezed by economic instability, geopolitical tensions and profound cultural transformations. The outlook for the rest of the year remains uncertain, but the industry's fundamentals are solid: over 300 million new consumers, half belonging to generations Z and Alpha, will enter the market in the next five years," commented Claudia D'Arpizio and Federica Levato, senior partners at Bain&Co and authors of the study.

Weighing on the trend of the first quarter and in general on the performance for the year - which sees strong differences between companies in the same sector, just as was the case in 2024, and the winners are the same as last year - are some strategic markets for luxury, China and the USA above all. Liberation Day (2 April), when Donald Trump announced tariffs on various markets, later lowered to a generalised 10% until 9 July (except for certain sectors such as cars and steel), further exacerbated the crisis. The Monitor shows how, in the United States, tariffs-induced volatility negatively affects the propensity to spend (not of high-spending consumers); however, there remains an interest in affordable luxury, which fuels hopes for a medium- to long-term recovery. In China, middle-class markets and consumption are in a 'wait-and-see' phase, although there remains potential for development. Europe and Japan, which over the past two years have held up or grown thanks to tourist shopping, are slowing down under the weight of the same dynamics afflicting the US and China. And local customers remain under pressure.

"The current context of geopolitical, trade and financial market instability has a negative impact on consumer confidence, and our sector is not immune to this," said Matteo Lunelli, president of Fondazione Altagamma, "which is why a 2025 downturn is expected. Putting things in perspective, however, we can speak of normalisation: we must take into account that the sector has had very few pauses for reflection and closed 2024 up 28% on 2019, hence the pre Covid. Furthermore, there is growth potential in markets such as the Middle East, Latin America and South-East Asia. Hopefully, a good and fair agreement on tariffs can be found between Europe and its US ally. I am optimistic: when there is clarity, it will be easier for everyone'.

Beyond the trend of sales by geography, which is certainly an important matter for reflection for companies like those in the luxury sector that have been operating in a global scenario for some time now, one fact emerges from the Monitor that is worth focusing on: that of the drastic drop in the engagement of luxury brands, which is due to lower interest, also as a result of price hikes and a lack of creative innovation, and which translates into a lower growth of followers on social networks and fewer interactions. As well as evidently being reflected in lower sales. According to the Monitor, online searches have dropped for more than 40 per cent of brands since 2022; growth in the number of followers on social has dropped by 90 per cent. "It is time for brands to take an act of courage: return to their essence. At a time when engagement is plummeting by 40% and profitability is faltering, only those who can abandon the ephemeral and embrace authenticity, quality and vision will be able to stand out. We need to build real bonds, speak the language of values, offer experiences that go beyond the product and nurture deep consumer relationships. Because the future of luxury will not be in volumes, but in meaning. It is no longer time to chase noise, but to generate meaning,' D'Arpizio and Levato conclude.